IRS defrauder gets nearly 6 years in prison

July 11, 2013

A city woman will spend nearly six years in federal prison after receiving a sentence this week for pleading guilty earlier this year to federal charges of conspiracy to defraud the Internal Revenue Service and Department of Public Welfare.

Cheryl N. Cobia, 28, who oversaw a conspiracy to defraud the IRS out of more than $1 million between 2009 and 2011, was sentenced Tuesday by U.S. Middle District Judge Matthew W. Brann to 70 months. Brann recommended an appropriate federal facility for Cobia,who is serving time at the State Correctional Institution at Muncy.

Assistant U.S. Attorney Wayne P. Samuelson described the scam in court papers as an "extensive income tax scheme operated on her laptop from her home."

Cobia attempted to get tax refunds and was successful in receiving $826,111 in tax refunds using deceptive means, he said. She also made false statements when applying for food stamp and Medical Assistance benefits.

From her juvenile days to her adult life, Cobia had a history of not leaving others' property alone, according to U.S. Attorney Peter J. Smith who sought a sentence of 85 to 105 months.

Brann earlier ordered the property and profits involved in the conspiracy to be forfeited. At sentencing, he said Cobia must pay $3,700 in restitution to the Department of Public Welfare.

Cobia solicited individuals, including inmates while she was incarcerated on retail theft charges, to provide their names, dates of birth, Social Security numbers, employer names and/or identification numbers in order to prepare false working forms known as W-2s. The forms contained names of employers who did not employ the listed workers as well as fabricated amounts of tax withholdings.

The tax refunds typically consisted of prepaid debit cards that contained the proceeds from the fraudulent tax returns, received through mail. However, a different prepaid debit card was obtained for each individual for whom the co-conspirators filed a fraudulent tax return, according to the charges.

In some cases, money orders would be bought using the debit cards. The money orders were for dollar amounts that were less than the cards, which enabled the conspirators to make money on the false tax returns, Samuelson said.

Some of the false returns included requests for receipts for child care expenses that were sent for the purpose of claiming false deductions and credits for child care, he said.

Her list of items she bought using deceptive means included four televisions, five handbags, two hats, two pair of shoes, six cellphones and a camera.